Correlation Between Salesforce and Pax Esg

Can any of the company-specific risk be diversified away by investing in both Salesforce and Pax Esg at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Salesforce and Pax Esg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Salesforce and Pax Esg Beta, you can compare the effects of market volatilities on Salesforce and Pax Esg and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Salesforce with a short position of Pax Esg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Pax Esg.

Diversification Opportunities for Salesforce and Pax Esg

-0.08

Correlation Coefficient

Salesforce  Pax Esg

Good diversification

The 3 months correlation between Salesforce and Pax is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Pax Esg Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Esg Beta and Salesforce is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Salesforce are associated (or correlated) with Pax Esg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Esg Beta has no effect on the direction of Salesforce i.e., Salesforce and Pax Esg go up and down completely randomly.

Pair Corralation between Salesforce and Pax Esg

Considering the 90-day investment horizon Salesforce is expected to generate 0.54 times more return on investment than Pax Esg. However, Salesforce is 1.86 times less risky than Pax Esg. It trades about -0.25 of its potential returns per unit of risk. Pax Esg Beta is currently generating about -0.3 per unit of risk. If you would invest  35,117  in Salesforce on October 10, 2024 and sell it today you would lose (2,427) from holding Salesforce or give up 6.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Salesforce  vs.  Pax Esg Beta

Salesforce

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Pax Esg Beta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pax Esg Beta has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Salesforce and Pax Esg

The main advantage of trading using opposite Salesforce and Pax Esg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Pax Esg can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pax Esg will offset losses from the drop in Pax Esg's long position.

The idea behind Salesforce and Pax Esg Beta pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.